The HSBC GIF India Fixed Income fund, which is Ucits compliant, is one of the first of its type offering exposure to a market that is otherwise difficult for international investors to access.
The new fund will invest primarily in domestic government and corporate bonds denominated in the Indian rupee through use of the Foreign Institutional Investor (FII) licence authorised by the Securities and Exchange Board of India.
It can also invest in bonds issued in other currencies that have a strong India connection.
HSBC Global Asset Management’s Asian fixed income team with offices in Mumbai, Hong Kong, Taipei and Shanghai, will manage the fund. It is lead by Gordon Rodrigues, head of Asian rates, foreign exchange and liquidity.
Rodrigues said the Indian fixed income markets are particularly difficult to enter for global investors so the fund will use three key access points: direct access to the domestic bond market through FII quota, indirect access through non-rupee-denominated bonds linked to Indian companies or cash hedged back into rupees, and synthetic exposure to India bonds through structured notes.
He added that the team aims to achieve a yield that is consistent with the underlying net yield of the domestic bond market which currently has one of the highest yields available anywhere in the world and is likely to contain investment grade and high yield bonds.
The fund will form part of HSBC’s Luxembourg-based global investment fund (GIF) range, which has funds registered for sale in approximately 30 countries globally.
The base currency is US dollars, although the underlying exposure will be to the Indian rupee.
